catalogue
1、 Audit report Page 1-7 II. Financial statements Page 8-15
(I) consolidated balance sheet Page 8
(II) balance sheet of the parent company Page 9
(III) consolidated income statement Page 10
(IV) profit statement of the parent company Page 11
(V) consolidated cash flow statement Page 12
(VI) cash flow statement of the parent company Page 13
(VII) consolidated statement of changes in owner’s equity Page 14
(VIII) statement of changes in owner’s equity of the parent company Page 15 III. notes to financial statements Page 16-91
Audit report
TJS [2022] No. 3898
Hangzhou Chang Chuan Technology Co.Ltd(300604) all shareholders:
1、 Audit opinion
We have audited the financial statements of Hangzhou Chang Chuan Technology Co.Ltd(300604) (hereinafter referred to as Hangzhou Chang Chuan Technology Co.Ltd(300604) company), including the consolidated and parent company’s balance sheet as of December 31, 2021, the consolidated and parent company’s income statement, consolidated and parent company’s cash flow statement, consolidated and parent company’s statement of changes in owner’s equity and notes to relevant financial statements in 2021.
In our opinion, the attached financial statements are prepared in accordance with the accounting standards for business enterprises in all material aspects, and fairly reflect the consolidated and parent company’s financial position of Hangzhou Chang Chuan Technology Co.Ltd(300604) company as of December 31, 2021, as well as the consolidated and parent company’s operating results and cash flow in 2021.
2、 Basis for forming audit opinions
We conducted our audit in accordance with the auditing standards for Chinese certified public accountants. The “responsibilities of certified public accountants for the audit of financial statements” in the audit report further expounds our responsibilities under these standards. In accordance with the code of professional ethics for Chinese certified public accountants, we are independent of Hangzhou Chang Chuan Technology Co.Ltd(300604) company and have fulfilled other responsibilities in terms of professional ethics. We believe that the audit evidence we have obtained is sufficient and appropriate, which provides a basis for our audit opinion.
3、 Key audit matters
The key audit matters are the most important matters that we consider to audit the current financial statements according to our professional judgment. The response to these matters is based on the overall audit of the financial statements and the formation of audit opinions. We will not express separate opinions on these matters.
（1） Recognition of operating income
1. Event description
See notes III (XXII), V (II) 1 and XIV (I) to the financial statements for relevant information disclosure.
The operating revenue of Hangzhou Chang Chuan Technology Co.Ltd(300604) company mainly comes from the sales of integrated circuit testing machines and sorting machines (hereinafter collectively referred to as complete machines). In 2021, Hangzhou Chang Chuan Technology Co.Ltd(300604) company’s operating revenue was 15112304 million yuan, an increase of 88.00% over the previous year, of which the sales revenue of complete machine was 14255625 million yuan, accounting for 94.33% of the operating revenue, an increase of 93.41% over the previous year.
The whole machine sales of Hangzhou Chang Chuan Technology Co.Ltd(300604) company belongs to the performance obligation at a certain point in time. For the sales of complete machines produced from the parent company of Hangzhou Chang Chuan Technology Co.Ltd(300604) company, the revenue shall be recognized according to the following methods: for customers without trial operation requirements, the revenue shall be recognized when the installation and commissioning of the sold products are qualified and the installation service report signed by the customer is obtained; For customers with trial operation requirements, the revenue shall be recognized when the product installation and commissioning have been completed and the trial operation has been completed, and the equipment use acceptance report signed by the customer is obtained. It is considered that the product meets the technical indicators agreed in the contract and reaches the expected usable state of the customer. When the complete machine produced by the subsidiary semiconductor technologies & Instruments Pte Ltd (hereinafter referred to as STI company) is sold in Singapore, the revenue is recognized when the product has been delivered to the customer and the customer signs the receipt confirmation; When selling complete machines outside Singapore, the revenue shall be recognized according to the following methods: (1) under exwork mode, the carrier designated by the customer shall pick up the goods on site and bear all expenses and risks from factory delivery to the final destination. In this mode, revenue is recognized when the carrier designated by the customer picks up the goods on site and signs the bill of lading. (2) Under DDU (duty unpaid delivery) mode, the products sold are transported to the designated destination and delivered to the customer, and are not responsible for handling import procedures and unloading. In this mode, revenue is recognized when the products are delivered to the receiving place designated by the customer. (3) Under DDP (delivery after tax) mode, the products sold are transported to the place designated by the customer, and delivered to the customer after going through customs declaration procedures and paying import taxes. In this mode, revenue is recognized when products are cleared and delivered to the place of receipt designated by the customer. (4) Under the mode of FOB (delivery on board the ship at the port of shipment) or CIF (delivery of goods to the foreign port designated by the customer), the risk will be transferred to the customer after the products sold are shipped to the designated ship or cargo flight. In this mode, the revenue is recognized when the product leaves the port after customs declaration and obtains the bill of lading.
Since operating revenue is one of the key performance indicators of Hangzhou Chang Chuan Technology Co.Ltd(300604) company, there may be inherent risks that the management of Hangzhou Chang Chuan Technology Co.Ltd(300604) company (hereinafter referred to as the management) may achieve specific goals or expectations through inappropriate revenue recognition. Therefore, we identified revenue recognition as a key audit matter.
2. Audit response
Our audit procedures mainly include:
(1) Understand the key internal controls related to revenue recognition, evaluate the design of these controls, determine whether they are implemented, and test the operation effectiveness of relevant internal controls;
(2) Check the sales contract, understand the main contract terms or conditions, and evaluate whether the revenue recognition method is appropriate; (3) Implement analysis procedures for operating revenue and gross profit margin on a monthly basis, products, customers, etc., identify whether there are significant or abnormal fluctuations, and find out the causes of fluctuations;
(4) Check the supporting documents related to revenue recognition by sampling, including sales contract or order, delivery (delivery) list, packing list, customs declaration, bill of lading, receipt, installation service report, equipment use acceptance report, sales invoice, sales collection voucher, etc;
(5) Combined with the letter of accounts receivable, the current sales volume is confirmed to the main customers by sampling;
(6) Conduct a cut-off test on the operating income recognized before and after the balance sheet date to evaluate whether the operating income is recognized in an appropriate period;
(7) Obtain the sales return records after the balance sheet date and check whether there is any situation that does not meet the conditions for revenue recognition on the balance sheet date;
(8) Check whether the information related to operating income has been properly presented in the financial statements.
（2） Impairment of accounts receivable
1. Event description
See note III (IX) and note V (I) 2 of the financial statements for relevant information disclosure.
As of December 31, 2021, the book balance of accounts receivable of Hangzhou Chang Chuan Technology Co.Ltd(300604) company was 665091600 yuan, the bad debt provision was 38536200 yuan, and the book value was 626555500 yuan.
According to the credit risk characteristics of various accounts receivable, the management measures its loss reserves according to the expected credit loss amount equivalent to the whole duration based on individual accounts receivable or combination of accounts receivable. For accounts receivable whose expected credit loss is measured on a single basis, the management comprehensively considers the reasonable and reliable information about past events, current situation and future economic situation forecast, estimates the expected cash flow received, and determines the bad debt provision to be withdrawn accordingly; For the accounts receivable whose expected credit loss is measured on the basis of portfolio, the management divides the portfolio based on the aging, refers to the historical credit loss experience and combines the forward-looking estimation, prepares the comparison table between the aging of accounts receivable and the default loss rate, and determines the accrued bad debt reserves accordingly.
As the amount of accounts receivable is significant and the impairment of accounts receivable involves significant management judgment, we determine the impairment of accounts receivable as a key audit event.
2. Audit response
For the impairment of accounts receivable, our audit procedures mainly include:
(1) Understand the key internal controls related to the impairment of accounts receivable, evaluate the design of these controls, determine whether they have been implemented, and test the operation effectiveness of relevant internal controls;
(2) Review the subsequent actual write off or reversal of accounts receivable for which bad debt reserves have been accrued in previous years, and evaluate the accuracy of previous forecasts of the management;
(3) Review the relevant considerations and objective evidence of the management’s credit risk assessment of accounts receivable, and evaluate whether the management has properly identified the credit risk characteristics of various accounts receivable;
(4) For accounts receivable that measure the expected credit loss on a single basis, obtain and check the management’s prediction of the expected cash flow received, evaluate the rationality of the key assumptions used in the prediction and the accuracy of the data, and check with the obtained external evidence;
(5) For accounts receivable whose expected credit loss is measured on the basis of portfolio, evaluate the rationality of the management’s division of portfolio according to the characteristics of credit risk; Based on the historical credit loss experience and forward-looking estimation of the combination with similar credit risk characteristics, evaluate the rationality of the comparison table between the aging of accounts receivable and the loss rate of default prepared by the management; Test the accuracy and completeness of the data used by the management and whether the calculation of bad debt reserves is accurate;
(6) We confirmed the balance of accounts receivable from some customers by sampling, and discussed the recovery of accounts receivable and possible recovery risks with the management;
(7) Check the post period collection of accounts receivable and evaluate the rationality of the management’s provision for bad debts of accounts receivable;
(8) Check whether the information related to the impairment of accounts receivable has been properly presented in the financial statements.
4、 Other information
The management is responsible for other information. Other information includes the information covered in the annual report, but does not include the financial statements and our audit report.
Our audit opinion on the financial statements does not cover other information, and we will not issue any form of assurance conclusion on other information.
In combination with our audit of the financial statements, our responsibility is to read other information and consider whether other information is materially inconsistent with the financial statements or the information we have learned in the audit process, or there seems to be material misstatement.
Based on the work we have performed, if we determine that there is a material misstatement in other information, we should report that fact. In this regard, we have nothing to report.
5、 Responsibilities of management and governance for financial statements
The management is responsible for preparing the financial statements in accordance with the provisions of the accounting standards for business enterprises to achieve a fair reflection, and designing, implementing and maintaining necessary internal control so that the financial statements are free from material misstatement caused by fraud or error.
When preparing the financial statements, the management is responsible for evaluating the sustainable operation ability of Hangzhou Chang Chuan Technology Co.Ltd(300604) company, disclosing matters related to sustainable operation (if applicable), and applying the assumption of sustainable operation, unless liquidation is planned, operation is terminated or there is no other realistic choice.
Hangzhou Chang Chuan Technology Co.Ltd(300604) corporate governance (hereinafter referred to as governance) is responsible for supervising the financial reporting process of Hangzhou Chang Chuan Technology Co.Ltd(300604) company.
6、 Responsibilities of certified public accountants for the audit of financial statements
Our goal is to obtain reasonable assurance on whether the financial statements as a whole are free from material misstatement due to fraud or error, and issue an audit report containing audit opinions. Reasonable assurance is a high-level assurance, but it does not guarantee that the audit performed in accordance with the audit standards will always be found when a major misstatement exists. Misstatement may be caused by fraud or error. If it is reasonably expected that the misstatement alone or in summary may affect the economic decisions made by the users of the financial statements based on the financial statements, the misstatement is generally considered to be significant.
In the process of carrying out the audit work in accordance with the audit standards, we use professional judgment and maintain professional doubt. At the same time, we also carry out the following work:
（1） Identify and assess the risks of material misstatement of financial statements due to fraud or error, design and implement audit procedures to deal with these risks, and obtain sufficient and appropriate audit evidence as the basis for issuing audit opinions. Since fraud may involve collusion, forgery, intentional omission, misrepresentation or override of internal control, the risk of failing to find major misstatement caused by fraud is higher than that caused by error.
（2） Understand the internal control related to audit to design appropriate audit procedures.
（3） The management shall evaluate the rationality and appropriateness of accounting policy disclosure.
（4） Draw conclusions on the appropriateness of management’s use of going concern assumptions. At the same time, according to the audit evidence obtained, draw a conclusion on whether there are major uncertainties in the matters or circumstances that may lead to major doubts about the sustainable operation ability of Hangzhou Chang Chuan Technology Co.Ltd(300604) company. If we conclude that there is significant uncertainty, the auditing standards require us to draw the attention of statement users to the relevant disclosures in the financial statements in the audit report; If the disclosure is insufficient, we should express a non unqualified opinion. Our conclusions are based on the information available as of the date of the audit report. However, future events or circumstances may cause Hangzhou Chang Chuan Technology Co.Ltd(300604) company to be unable to continue its business.
（5） Evaluate the overall presentation, structure and content of the financial statements, and evaluate whether the financial statements fairly reflect relevant transactions and events.
（6） Obtain sufficient and appropriate audit evidence on the financial information of entities or business activities in Hangzhou Chang Chuan Technology Co.Ltd(300604) company to express audit opinions on the financial statements. We are responsible for guiding, supervising and implementing the group audit, and take full responsibility for the audit opinions.
We communicated with the management on the planned audit scope, schedule and major audit findings, including the internal control defects that we identified in the audit.
We also provide a statement to the management that we have complied with the professional ethics requirements related to independence, and communicate with the management all relationships and other matters that may reasonably be considered to affect our independence, as well as relevant preventive measures (if applicable).
From the matters communicated with the management, we determine which matters are the most important for the audit of the current financial statements, thus constituting key audit matters. We describe these matters in the audit report, unless laws and regulations prohibit the public disclosure of these matters, or in rare cases, if the negative consequences of communicating a matter in the audit report are reasonably expected to exceed the benefits in the public interest, we determine that we should not communicate the matter in the audit report. Tianjian Certified Public Accountants (special general partnership) Chinese certified public accountant:
(project partner)
